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Child wants to start his own business, unsure of legal setup

My son who is only 6 will be starting his own business selling cookies. Of
course we will be helping him in many ways. I've done some research but
cannot get a concise answer to my questions.
We will be doing business in the state of FL.
There are two ways we can set this up, both being a sole-proprietor.
1. Register in his name but be a signer of the company. He would file a tax
return. We (parents) will donate our time as to not have to incur more tax
headaches (payroll, social security taxes, etc).
a. How is the money going to be handled? Will a bank allow him to open an
account in his name, which is required when setting up a DBA.
2. Register the business in our name. This is where it gets confusing for
Child Labor laws. I've read that if it's a family business, they can work for
free??? It all goes to the same household. If I do have to put him on the
payroll, then it might be easier and pay less taxes to register in his name.
I'm trying to avoid paying more taxes than needed. Also want the simplest way
to do this. I would appreciate your feedback. Thanks.
Jeremy

JGabriel | Community Moderator |
2/20/2014 - 9:57 am

BizResearcher | Window Shopper |
2/14/2014 - 3:20 pm

BusinessPlanMentor is correct. A person under 18 cannot legally own a
business, nor can your son open a bank account. Additionally, if you sell
food to the public, it must be baked in a commercial kitchen, not a home
kitchen. Unless you plan to make regular sales and anticipate earning quite a
bit, you may want to consider this to be a hobby business, at least to start.
The requirements are much less restrictive.

BusinessPlanMentor | Window Shopper |
2/14/2014 - 11:33 am

If you and/or your spouse are actually baking the cookies and carrying out
the "business" duties then it's your business and not your 6 yr old's
business. If you are calling it his business but "helping him in many ways"
that tells me (and probably the IRS) that it is indeed your business. After
all, how much can a 6 yr old do to run a business?

Also, is this really a business or a hobby? You should read up on that at
IRS.gov before you proceed with the business set up.

Lastly, you will want to check with your city/town/county regarding the use
of a home kitchen vs a commercial kitchen for limitations, requirements,
permits, licensing etc. There may be be health laws/inspections that apply.